The trend of online shopping and e-commerce platforms has increased significantly in recent years. Often, it happens that the delivered product doesn’t meet our needs or expectations due to the wrong or defective item, and that’s where the role of return management comes into play. Today, we’ll discuss return in supply chain management; its definition, key elements, and benefits.
What is Return in Supply Chain Management?
Return in supply chain management is the opposite of the logistical process where goods move backward from customers to suppliers and the manufacturer. The return in SCM also goes by the name of reverse logistics, it is when products move backward from their final destination or end consumers back to the manufacturer for a number of reasons.
However, the process of return in SCM comprises how you deal with the returned products. In order to amplify the lifecycle, there are various options for them like recycling, disposal off, refurbished, and reused. Return management is highly expensive and time-consuming for businesses and companies. That’s why businesses and companies should develop partnerships with 3PL (3rd party logistics) service providers to manage their SC processes and returned products.
The process of return in SCM consists of the following stakeholders;
Elements of Return in SCM
Some of the key elements of return in supply chain management are as follows;
Reverse logistics deals with the flow of products and goods from the customers back to the retailer and producers. It comprises of various stages focusing on receiving the returned goods, analyzing their conditions, restocking, refurbishing, and then transporting them back to the manufacturer or retailer. Effective reverse logistical processes would help companies manage inventory, limit waste, and SC operations effectively.
Convenient and easy return process improves the customer experience. The objective is to make sure that the customers would have a positive experience while returning their product. However, it comprises clear return policies, an easily understandable process, and offering various return options like pick-up services, drop-off locations, or in-store returns.
Asset recovery is the method of receiving and gaining value from the returned product by disposing, reselling, repairing, and refurbishing. It is a cost-efficient method of recovering some of the losses incurred from the return. In the case of non-sellable items, it means disposing of the items in an eco-friendly way.
If customers are returning the products over and over again and they comprise the large quantity. It means that your production facility is facing a large problem comprising of a faulty unit. You should consider recalling or changing some of the production and manufacturing processes. 3PL would help you to know the total number of returns and the batch where they’re coming from.
Percent of Sale
It is significant to know the percentage of sales that the returned products are causing lose; and the number of products you could refurbish and put back in the SC network. It allows you to take steps to decrease the losses. Some 3PLs have got the tools, expertise, system, and resources to repair and repackage the products for shipment.
It is possible that your business is losing millions of capital value, and you won’t know it without analyzing your return management. It is significant to analyze the value of the product and returned items and find out the repairable and re-sellable items that would add value to the company.
Benefits of Return in SCM
Some of the main benefits of return in supply chain management are as follows;
Return management would help you to recognize methods to recycle, resell, and reuse material that doesn’t have any other use. It not only amplifies your profitability but also the brand reputation for a socially and environmentally responsible organization. The lifecycle of the product would increase with refurbishing and remanufacturing.
If you have a well-developed process to return and receive product replacements quickly and efficiently, then it helps you to improve the customer satisfaction level. It allows you to speed up the process of product reusing, refurbishing, and repairing and it decreases the need to procure new products.
How companies manage their return would impact the way customers feel about your brand. The defective product would cause a negative customer experience, and dealing with such errors is as significant as increasing sales. If customers have a problem with your problem, then it is your job to fix it and offer them alternative solutions.
You can decrease the cost in various ways ranging from low transportation spending to reselling items; it would be a great loss if the company has to dispose of them upon return. If the company is receiving value from reselling and recycling, and the system is operating efficiently, then it would increase profitability.
Conclusion: Return in Supply Chain Management
After an in-depth study of return in supply chain management; we have realized that return management is a highly significant part of SC and the logistical process. If you are learning about return management in SCM, then you should keep in mind the abovementioned key elements and benefits.
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